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Is Chapter 13 bankruptcy an option for you?

If your debts have become truly unmanageable, you may want to consider filing for Chapter 13 bankruptcy. Sometimes referred to as a wage earner's plan, Chapter 13 allows individuals who have a steady income to come up with a repayment plan for a portion or all of their debt load.

Debtors make a proposal for installment payments to be regularly paid to their creditors over a period of three to five years. When a debtor's monthly income falls below the state median, the plan is for three years unless the debtor gets court approval for a longer term "for cause."

When a debtor's monthly income is higher than the state median, usually the plan will be stretched out over five years. Creditors are barred from initiating or continuing their attempts at collecting while the plan is in effect.

Many people prefer filing for Chapter 13 over Chapter 7 because they can try to save their home from being foreclosed upon by the lending institution holding the mortgage. Also, the consolidated payment for all debts is made to the trustee and then distributed to creditors, making it easier to keep track of for the debtor.

Sometimes after filing under Chapter 13, a debtor's circumstances change and compromise his or her ability to meet their payment plan arrangements. Plans can be modified both before and after they have been confirmed. Trustees and unsecured creditors may also request modifications after confirmation.

If you think that filing for Chapter 13 bankruptcy might be a viable option for your financial situation, a New Jersey bankruptcy attorney can address specific questions you may have.

Source: United States Courts, "Chapter 13 - Bankruptcy Basics," accessed Sep. 09, 2016

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.